Last Update: February 2014
Commentary on the recent development of price indices
In January, all three of FAO’s price indices for the oilcrop complex fell, though the vegetable oil index dropped more markedly. Month-on-month, the indices for oilseeds and oilmeals fell by 2 and 4 points respectively (or 1 – 1.5 percent), whereas the prices index for vegetable oils dipped by as much as 7 points (or 3.8 percent). In historical terms, the oilseeds and oils indices continued to fare below the average of the past two seasons, while the meals index remained at historically high levels.
The global oilseed and oilmeal markets eased under the influence of prospective record soybean crops in South America. Recent rains – ending a spell of dry weather that had created considerable moisture stress, especially in Argentina – have been very beneficial for the region’s soybean crops, with first harvest reports from Brazil and Paraguay confirming expectations of record crops. The prospective shift of global import demand from US origin soybeans to South American sources is also taking off pressure from prices, although logistic difficulties, especially in Brazil, are expected to remain of concern.
International rapeseed prices weakened in response to ample global supplies – despite the recent slowdown in exports from Canada that may lead to higher than earlier anticipated end-of-season stocks in that country. Finally, abundant availabilities of sunflower seed, in particular in the Black Sea region, also contributed to the general slackening in prices.
With respect to the global vegetable oil market, prices have been primarily driven by developments in the palm oil and soy oil sector. Continued slow export demand for palm oil, coupled with abundant production in both Malaysia and Indonesia, has led to concerns over growing palm oil inventories. Reportedly, the outlook of rising palm oil uptake by the local biodiesel industry in Indonesia has prevented prices from falling even more markedly. International soy oil quotations eased further, following the global market for soybeans, but also in response to weaker demand from the biodiesel sector in Argentina and the United States. Large export availabilities of both sunflower and rapeseed oil also weighed on the index.